Hollywood, which has until recently enjoyed steady growth on the back of DVD sales, is now suffering a rapid decline in DVD sales while lackluster adoption of the new, high-definition Blu-Ray disc format has thus far not come close to offsetting lost DVD revenue.

The global audiovisual industry is currently at a crossroads as new digital revenue streams aren't developing quickly enough to offset declining traditional revenue streams, the report indicates. The filmed entertainment sector, which enjoyed steady growth primarily on the back of DVD sales until a few years ago, is now experiencing a rapid declining in DVD sell-trough and rentals and lacklustre uptake of the new high definition Blu-Ray disc format around the world has thus far not come close to offset lost DVD revenue. The television sector, meanwhile, was hit by the full force of the global financial crisis in 2009 and saw global television advertising expenditure drop by more than 8%. The audiovisual industry as a whole is now on a long term path of transitioning from a traditional, linear "offline" distribution model that has served it well for the better part of a century, to an emerging digital future that will increasingly be depending on a connected world requiring ondemand experiences.

According to a new report published by the Strategy Analytics Digital Media Strategies service, global DVD sales plunged 9% last year to $33 billion and will drop a further 12% in 2010. The report, "Global Audiovisual Market Forecast," predicts that while global Blu-Ray sales will reach $6.5 billion this year that will not be enough to offset the expected continued drop in DVD sales.

"DVD sales figures will continue to fall in the coming years and we do not expect Blu-Ray sales to make up for the loss," commented Jia Wu, Analyst at Strategy Analytics? Digital Consumer Practice. "The Blu-Ray format faces greater competition from DVDs than DVDs did from VHS. Also, Blu-Ray will have to compete with next-generation digital on-demand services."

"Now is the time for Hollywood studios to accelerate plans for digital distribution in addition to Blu-Ray," added Martin Olausson, Director of Digital Media Research at Strategy Analytics, "Otherwise, the industry is poised to face the prospect of a worsening home video market in the years ahead."